New Home Ombudsman Proposed

MP back plan for ombudsman to resolve new homes disputes

The government is under pressure to set up an independent ombudsman with the power to order housebuilders to pay out up to £50,000 or even reverse a sale, following reports of new-home buyers lumbered with defective properties.

A group of MPs and peers has called on the government to make it mandatory for housebuilders to belong to the proposed scheme, which would be free for consumers and offer a quick resolution to disputes. The scheme would be funded by a levy on housebuilders, with larger ones such as Berkeley Group, Persimmon, Barratt, Galliford Try, Redrow and Bovis Homes, paying more than small and medium-sized firms.

A report, Better Redress for Home Buyers, by the all-party parliamentary group for excellence in the built environment, highlights the confusing landscape buyers face when trying to resolve building defects, not helped by a plethora of warranties, housebuilding codes and complaints procedures.

It says the proposed ombudsman should be able to order payouts of up to £50,000 so buyers are not left out of pocket. Disputes over larger sums might have to be settled in court, but the report adds: “In certain extreme situations the new homes ombudsman should be able to reverse the sale.”

A recent survey by the Home Builders Federation and the main warranty provider, NHBC, showed that 98% of new-home buyers reported snags or bigger defects to their housebuilder after moving in.

Katrine Sporle, the property ombudsman, says: “New homes should be covered by an ombudsman. People have no idea that when they buy a new home directly from the developer, they have no access to redress.”

The proposed scheme would cover the first two years following a house purchase when housebuilders are liable for defects, while subsequent problems would be down to the warranty providers.

The report says: “Affected homebuyers are exasperated not so much by the existence of defects but by a builder’s failure or even refusal to put them right. Submissions we received described how buying a new home had been ‘the worst decision of their life’; how it was like ‘going through hell’ as the complaint passed between housebuilders and warranty providers; and how fighting for redress was taking a toll on their health.”

The proposals have been presented to the ministry of housing, communities and local government as part of its consultation on a single housing ombudsman.